assume that the actual level of production in the production cost center in 01 is a 612600

Costs of conversion of finished goods

In 01, entity E started the production of product P. The production of P required direct materials of CU 100 and 10,000 hours in the cost unit “manufacturing” in 01. The following additional information is given (in CU):

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Material cost center

Production cost center

Direct materials

1,000

Direct labor

1,250

Various overheads

600

2,500

60% of the costs presented as “various overheads” in the table above represent fixed costs and 40% of them represent variable costs. Normal capacity of the production cost center is 100,000 hours p.a.

Posting status:

The costs mentioned above have been recognized as “cost of sales.”

Required

Prepare any necessary entries in E”s financial statements as at Dec 31, 01. Assume that the actual level of production in the production cost center in 01 is (a) 125,000 hours and (b) 75,000 hours.

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